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title: 04 Week Contracts Slides
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# PCL 1L Contracts
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[@peoplescollolaw](https://twitter.com/peoplescollolaw)

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# Part I

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## Review

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## Generally Not Offers

- Advertisements
- Catalogs
- Circular Letters
- Language that's uncommitted or equivocal (e.g. I'm thinking about, I'm considering, etc.)

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## Who's who?

**Offeror** = party making the offer
**Offeree** = party with power to accept offer

At which point do the parties intend to be bound? When are they bound?

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"Master of the Offer": The offeror can include any terms, including those limiting acceptance to a particular form.

Example: acceptance must consist of singing "The Internationale" on the SW corner of Wilshire and Alvarado.

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## Offer

Outward manifestation of present contractual intent, communicated to the offeree in certain and definite terms, and inviting acceptance.

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## The Offer

Use facts to prove elements. IRAC and "A" should discuss:

- Outward manifestation, present contractual intent?
- Communicated to the offeree?
- Granting power of acceptance?
- Certain and definite terms?

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### Power of Acceptance

Once an valid offer is made, the offeree has power to accept.

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## Required terms

Are there Certain and Definite terms? The minimum are:

**CL** = QTIPS
**UCC** Quantity (subject matter must be ascertainable)

(CL special: Sale of Land, Employment, Services)
(UCC special: Requirements and Output)

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# Part II

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## Missing Terms/Gap Fillers

Under the UCC if the parties intended to contract, the court can supply reasonable terms for missing terms. The only term generally required is quantity, although subject matter must be ascertainable. Gap fillers for terms like price at the time of delivery, and time will be reasonable. The court will sometimes look to course of performance, course of dealing, or trade custom to determine terms.

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### **Course of Performance**

The performance under the current contract where there has been repeated occasions for performance and the other party hasn't objected to the performance.

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### **Course of Dealing**

The performance of the parties in previously contracted transactions can be used by the court as evidence of the parties understanding. This can be used to establish terms in a new contract.

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### **Trade Usage**

Trade usage of custom can explain a term. The court looks to the trade's practice or method of dealing to determine terms.

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## **Offer Termination**

An offer terminates on revocation, rejection (or counteroffer), lapse of time, incapacity, death of a party, destruction of subject matter, intervening illegality.

(we used the mnemonic RRLIDDI - railroad liddi)

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### Revocation

Offeror retracts offer before offeree can accept. Terminates power of acceptance. Effective upon receipt.

- Directly communicates
- By publication (by comparable mean)
- Indirectly (conduct or through reliable source)
- See rule *barbri* II.C.1.a.(1)(b)

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### Rejection

Offeree communicates that they do not intend to accept the offer. Effective when received.

- Express
- Counteroffer (CL or UCC w/o merchant(s))
- express rejection with new offer
- acceptance conditioned on additional terms

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#### Counteroffer

At common law, or under the UCC when both parties are ***not*** merchants, the offeree asking for different terms regarding the same subject matter is a counteroffer. It is considered a rejection and a ***new*** offer, where the roles of offeror and offeree have switched.

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#### Revival of Offers

An offeror may restate an offer after it has been rejected.

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### Lapse of Time

Offeree must accept within time specified in the offer, or in a reasonable time if no time is specified.

- what would a reasonable person assume was deadline?
- look to facts regarding receipt of offer by the offeree

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### Incapacity

Supervenening mental incapacity of either party terminates the offer by operation of law. Generally must be adjudicated incapacity.

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### Death of a Party

Supervenening death of either party terminates the offer by operation of law.

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### Destruction of Subject Matter

Destruction of the subject matter terminates the offer by operation of law.

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### Intervening Illegality

If the subject matter of the proposed contract becomes illegal, the offer terminates by operation of law.

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# Part III

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## Holding Offers Open

- Options (aka Option Contracts)(CL/UCC)
- Merchant's Firm Offer (UCC)

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### **Option Contract**

An option is a distinct contract in which the offeree gives separate **consideration** to have an offer held open. The offeror may not revoke the offer during the time specified in the option, or if none is specified, a reasonable time.

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What happens when the option expires, but there's no language terminating the offer?

- some jurisdictions consider offer to expire at expiration of option

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### Our cases this week

*Beall v. Beall*

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## **Merchant's Firm Offer**

If an offeror 1) is a merchant; 2) makes an offer regarding goods in a signed writing that; 3) provides assurance that an offer will remain open, then the offer will remain open without consideration for the time specified, or a reasonable time, but in no case longer than three months.

(remember that the courts will find most things from a merchant to be a signed writing: letterhead, email from a company domain, etc.)

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### MFO example

[June 2012 Q1](http://www.calbar.ca.gov/Portals/0/documents/admissions/fyx/FYSelectedAnswerswithQuestions_R.pdf)

###### http://www.calbar.ca.gov/Portals/0/documents/admissions/fyx/FYSelectedAnswerswithQuestions_R.pdf

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## Other Limitations on Revocation

- performance begun on unilateral contract (reasonable time to complete)
- detrimental reliance (subcontractor bids for a general contractor's irrevocable offer)

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:scales: :mortar_board: [@peoplescollolaw](https://twitter.com/peoplescollolaw) :mortar_board: :scales:

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